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Traveling to the Middle East can be a disconcerting experience. One day you feel as if you're journeying into the future, the next day into the past.

The futuristic part of our recent trip-- undertaken with a bipartisan delegation of American policy wonks, and organized by the Center for Strategic and International Studies--was our visit to Dubai. A mere decade ago this city perched on the edge of the Persian Gulf amounted to a single office tower and lots of sand. Today it looks like a Hong Kong, Shanghai, or Singapore in the making, with elements of Miami and Las Vegas tossed in. A drive into town along a traffic-clogged highway takes a visitor past glass-and-steel skyscrapers too numerous to count. Some are complete, others still under construction. Giant cranes are everywhere: Dubai is estimated to have up to 25 percent of the world total.

The ambitions of this parvenu city seem limitless. Old showpiece projects are constantly being superseded by new ones. An eight-year-old hotel built in the shape of a sail and a two-year-old indoor ski slope are old news. The buzz now is about the silvery Burj Dubai ("burj" means tower in Arabic), which will be the tallest building in the world. With 156 stories completed, it has already far surpassed the previous record-holder, the 101-story Taipei tower in Taiwan. The ultimate height is a secret, but it will exceed 160 stories, or twice the height of the Empire State Building. Numerous other, slightly shorter buildings are going up around the Burj, along with what is being called the world's biggest mall, exceeding in size the nearby Mall of the Emirates which at one time claimed that title. The Burj is estimated to cost $1 billion, the whole multiacre project $20 billion.

More by Lee Wolosky

This vertical city will have offices, apartments, and an Armani hotel. Who will volunteer to inhabit its uppermost floors? That hasn't been announced, but the developer--a company called Emaar, which is 32 percent owned by the government of Dubai--claims to have sold the first 52 apartments within an hour of their going on the market, with apartments supposedly fetching $10 million.

Although the United Arab Emirates sit on 10 percent of the world's proven crude oil reserves, such grandiose projects are not being built with the proceeds from black gold--at least not directly. Dubai has relatively little in the way of natural resources; most of the Emirates' oil is to be found in neighboring Abu Dhabi. (The UAE is a federation of seven emirates created after the British pullout in 1971-72.) But thanks to an aggressive strategy of broadening the economy's base, only 30 percent of the UAE's GDP now comes from the energy sector--down from 75 percent during the last oil boom in the 1970s. The rest comes from investment within the UAE, and from the hundreds of billions of dollars invested in the outside world by the country's "sovereign wealth" funds. (The Abu Dhabi Investment Authority just announced a $7.5 billion investment in Citigroup, making it the largest shareholder in America's largest bank.) Black gold still enters the picture: It is the original source of a lot of the capital invested in and by Dubai. But it is growing less important in the overall scheme of things than in neighboring states.

One of Dubai's largest companies attracted unwanted publicity last year when Dubai Ports World, a state-owned company formerly known as the Dubai Ports Authority, sought to assume management of six major U.S. ports after acquiring their previous operator, the British-based Peninsular and Oriental Steam Navigation Company. DPW's proposed investment was nixed after a political outcry in the United States, even though the UAE is one of America's closest partners in the Arab world and in many respects a model of what we would like the region to look like in the future. Dubai is a major port of call for the U.S. Navy, the UAE has Special Forces deployed to Afghanistan, and the country supports U.S. military operations in a variety of important ways.

The one area where more help is needed is sanctions against Iran. The Iranian Business Council estimates that some 300,000 Iranians live in the UAE and hold $300 billion in assets there. Many of these Iranians operate banks, businesses, and front companies that provide the mullahs a critical financial and economic outlet to the rest of the world. While the UAE has been doing a much better job of cooperating with the United States to stop terrorist money laundering since the 9/11 attacks (which were carried out by, inter alia, two Emiratis), it would be helpful if the UAE did more to implement multilateral and unilateral U.S. financial sanctions against Iran. Without the UAE, such steps will be meaningless.